A financial BLOG written by a DIY investor covering Singapore blue chips, dividend stocks, financial education, corporate news, money saving tips, book reviews and my journey to financial freedom. Currently managing a personal portfolio of more than SGD $1,000,000, I aspire to have an average cash flow of minimum $10,000 per month either through realised capital gains or dividends.

Monday, November 15, 2010

A Visit To Esparina Residences

I was driving near Sengkang and decide to pop by the new EC, Esparina Residences. The prices were extremely competitive!

As more than 90% were sold, only 2 bedroom units were left. This is a peculiar phenomenon as usually 2 bedroom units were the 1st the be snapped up in any new launches. As this development is an EC, the main barrier is $10,000 household income. I was interested in a 3rd floor 2 bedroom unit.

The prices were really reasonable. A 2 bedroom 829 sq ft unit, morning sun with blocked afternoon sun and facing a garden, it costs $617k before CPF grant of $30k.

TOP is expected to be in 1st quarter 2014. PSF price works out to be $744.

I believe this is a good buy, stay invest unit for a couple of reasons.

7 comments:

I had just bought Micasa located in CCK last year (p.s.f $670 for a 13th flr unit). Not sure to sell it now or stay in it and rent out my 5 room flat. Reason : Potential crash in US market (probably in 2011 or 2012) which may bring down property price, US may curb inflation rate by increasing interest rate. Any advice?

1.08% and 40 years financing? Sorry but this is NOT cheap at all! How long will interest rates stay at this kind of low? What will happen then if rates double or even triple? Your installment will go up to $2,400 or $3,600 per month.

Also, a loan tenure of 40 years is simply too long! Gosh, even 25 years is probably too long, but 40 years is literally paying till you are old....

I'm eligible for the Esparina. In fact, it's right behind my parents' HDB. So I probably know that area very very well.

We cannot compare Esparina with resale HDBs, because Esparina is a new launch, and is under HDB rules.

The reasons why I do not want to go with Esparina is

1) Price. A 5-rm HDB costing $326k at Fernvale is much cheaper, yet near 24 hrs NTUC and Koufu. While it is not near any MRT, it is just beside Fernvale LRT, which connects to SengKang MRT. Not only is it cheaper, it is also bigger. The price per square foot is lower.

2) Location. The Fernvale HDB I paid an option fee for is also walking distance to Jalan Kayu. A bus stop distance away is the Greenwich mall that is being built. For drivers, the place is just beside TPE, very near to CTE and SLE.

3) HDB restrictions. Buying an EC entails the usual HDB restrictions. All restrictions are gone only after 10 years. With this consideration, I would think a HDB is more worth it.

I do have the intention to hold too.Just worry if market crash (drop in property value) couple with hyper inflation (increase in interest rate) could result in : Not able to sell property as you would make a lost, and got a hard time sustaining the monthly loan due to the high interest rate.

1. Rental income is taxable. But, there are other deductibles. There will be revenue leakage to tax as a result. If you choose to rent illegally and not pay tax, you're going to get into trouble with at least 2 authorities.

2. How about the property tax involved? The rates are different between a residence and a non-primary residence. 4% vs 10%.

3. The monthly maintenance of $180will likely increase after the 1st year when all the warranties start running out.

4. Get ready for monthly contributions to sinking fund too.

40 year loan is probably not a good idea. The bulk of the monthly instalment payments end up going towards interests rather than paying down the principal.

There are the twin risks of (a) interest rate increases (very real given that current rates are at historic lows), and (b) devaluation of property value given that it is at historic highs? [In the worst case, the equity falls below loan value which will trigger the bank to call in an immediate capital top up to make up the difference?]

Singapore Blue Chips

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About Me

I am an ordinary Singaporean guy in my early thirties who is passionate about investing since 2003.
I live in a 4 room HDB flat and like many Singaporeans, dream of becoming a millionaire.
Currently I am an ordinary worker and have just completed my Masters. I aspire to build up a portfolio of 1 million dollars and derive a yearly recurring dividend income of 6% by 35.
The only way to achieve this aim is to work hard and invest prudently.
I invest in a variety of instruments such as unit trusts, stocks, REITS and foreign currencies mainly Australian dollars options.